Tech firms overtake financials in the City office rental market

Kasmira Jefford
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LANDLORDS in the Square Mile have seen a surge in demand from tech firms since the start of the year, with office take-up increasing by 39 per cent, according to estate agents Knight Frank.

Technology, media and telecoms (TMT) firms acquired 931,000 square feet of offices in the first nine months of 2012, compared with 670,000 sq ft during the same period last year.

This compares with just 620,000 sq ft taken up by the financial sector so far this year, down from 680,000 sq ft in 2011.

TMT now accounts for around 25 per cent of leasing activity in the City, up from 10 per cent at the start of the crisis in 2007.

Major deals this year include Skype taking 89,000 sq ft at 2 Waterhouse Square in Holborn and Oracle acquiring 22,000 sq ft at 1 South Place in Moorgate.

James Roberts, head of commercial research at Knight Frank said: “this is part of a global phenomenon, as we are seeing rising TMT demand being reported in Chicago, New York, Dublin, and Berlin, as well as London.

“The City of London is emerging as a focus point as it has the transport, telecommunications, and power infrastructure to support this growing sector.

Bradley Baker, head of central London tenant representation said: “Value for money is pushing them towards the City where rents are lower compared to the West End, and activity is no longer restricted to the Northern City districts of Shoreditch and Farringdon, with older City core offices now of interest.”

Research from BNP Paribas released earlier this month estimated that TMT sector demand for London office space will reach 4.65m sq ft by the end of 2014 – equivalent to eight Shards, and half of the total average take up in London per year.